China’s Hu to cement Manila ties with investments

Chinese President Hu Jintao will come bearing gifts on his first state visit to the Philippines next week as Beijing steps up efforts to woo its resource-rich Southeast Asian neighbors and balance the influence of the United States.

Upon the invitation of President Arroyo, Hu is due to arrive on Tuesday for a three-day visit aimed at affirming bilateral relations between the two countries.

Hu is making the trip in reciprocation for Mrs. Arroyo’s state visit to Beijing in September 2004.

The Department of Foreign Affairs (DFA) said Hu’s visit affirms the special personal goodwill between the two leaders, who first met in Beijing in March 2002 when they were both still vice presidents.

This is the first state visit from China since November 1996, when then President Jiang Zemin visited Manila following the Asia-Pacific Economic Cooperation leaders’ meeting in Subic, Zambales.

Hu’s visit also marks the 30th year since the Philippines and China established diplomatic relations.

Philippine officials said Hu’s delegation is expected to sign investment pledges worth more than $1.5 billion, most of them in the revitalized Philippine mining sector that China is keen to exploit as its booming economy sucks up more resources.

The Philippines said on Wednesday that Hu would oversee the signing of the biggest Chinese investment in the country after Baosteel group and Jinchuan Nonferrous Metals Corp. agreed to spend $1 billion to rehabilitate a nickel plant in the southern Philippines.

"This will be the first wave of Chinese investments in the country," said Jose Antonio, the Philippines’ special envoy to China.

China’s trade and investment ties with the Philippines and other Southeast Asian countries have grown rapidly in recent years. It now ranks as the Philippines’ fourth-biggest trade partner, up from 12th biggest in 2001.

Chinese foreign direct investment in Southeast Asia has also been on the rise as Beijing, encouraging firms under a "Go Out" policy, seeks to secure resources and raise its diplomatic profile in a region long seen as America and Japan’s backyard.

"China is using her economic strength to win over the support of her Asian neighbors diplomatically and she seems to be winning the campaign," said Benito Lim, a politics professor at the University of the Philippines.

The Philippine Supreme Court opened the door to foreign investors last December with a ruling that foreign firms could own up to 100 percent of Philippine mining ventures.

Antonio said local mining firm Benguet Corp. was likely to sign a deal with state-owned China Metallurgical Corp. during Hu’s visit to develop a nickel reserve in the northern Philippines.

That deal could be worth $800 million, the amount Benguet estimates it needs to develop the mining reserve.

Closer Security Ties

One of Washington’s strongest allies in the region, the Philippines has also moved to strengthen security and defense ties with China.

Beijing agreed to give the Philippines $1.2 million in military assistance when Defense Secretary Avelino Cruz visited China last year and the two countries said they would increase exchanges between military officers.

Mrs. Arroyo surprised many last year when she made China her first foreign destination after winning a new term in last May’s elections.

Lim said Mrs. Arroyo needed to move carefully in expanding military links with China to avoid irritating the US and the older generation within the Philippine military.

"A lot of Filipinos who are close to the Americans, especially in the retired section of the military, would like the President to tread with caution," he said.

Diplomatic ties between Manila and Beijing began in 1975 but it took another 20 years to open defense and military relations.

The one major irritant in relations remains the Spratly Islands in the South China Sea, which are claimed in whole or part by six countries, including China and the Philippines.

But even here, there are signs of a thaw.

State oil firms in China, the Philippines and Vietnam signed a deal in March for a three-year joint marine study in the South China Sea, including the Spratlys.

The Philippine and Chinese state firms are set to follow up that agreement during Hu’s visit with a deal to hunt for oil in the Calamina area off the coast of Palawan island, Philippine officials said yesterday. — Pia Lee-Brago